Bitfarms Acquires Rival Stronghold Digital in $175M Stock and Debt Deal

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Jimmy Aki

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Jimmy Aki

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Jimmy has nearly 10 years of experience as a journalist and writer in the blockchain industry. He has worked with well-known publications such as Bitcoin Magazine, CCN, and Blockonomi, covering news...

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August 21, 2024

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Bitcoin mining company Bitfarms has announced the acquisition of rival firm Stronghold Digital Mining in a $175 million stock and debt-financed deal. The transaction, unanimously approved by the boards of both companies, is expected to close in the first quarter of 2025.

Acquisition of Stronghold Digital To Strengthen Bitfarms’ Energy Portfolio and Expansion Potential

According to an official press release, Bitfarms will acquire Stronghold through a $125 million equity transaction and assume $50 million worth of Stronghold’s existing debt.

Under the terms of the agreement, Stronghold shareholders will receive 2.52 shares of Bitfarms for each share they own.

“After three years of ongoing discussions, I am proud to announce this transformative acquisition, which is a decisive step in securing a strong future for Bitfarms,” said Ben Gagnon, CEO of Bitfarms.

The acquisition is expected to add 307 megawatts of power capacity to Bitfarms’ operations, placing the company on track to increase its total energy portfolio to over 950 megawatts by the end of 2025.

Similarly, the integration of Stronghold’s two “tier two” merchant power plants in Pennsylvania will further enhance Bitfarms’ energy portfolio and diversify its geographic footprint.

This significant boost in energy resources will strengthen Bitfarms’ position as a leading player in the North American Bitcoin mining landscape.

Notably, Stronghold shareholders are poised to own just under 10% of the combined company following the completion of the transaction, which represents a 71% premium to Stronghold’s 90-day volume-weighted average price on Nasdaq as of August 16.

“This transaction is a decisive step in diversifying our business and creating greater long-term shareholder value,” Gagnon said. “By vertically integrating with power generation, expanding energy trading capabilities, and securing high-potential sites for high-performance computing and AI, we aim to go beyond just Bitcoin mining and position Bitfarms for sustained growth,” Gagnon added.

Bitfarm and Riot Platforms Navigate Industry Uncertainty through Strategic Acquisitions

Bitfarm’s acquisition comes at a time of uncertainty for many Bitcoin miners, impacted by the recent fourth Bitcoin halving that reduced their revenues.

In response, several companies have been exploring ways to expand their operations, mining fleets, and geographic presence and diversify into adjacent industries like high-performance computing (HPC).

One of the largest U.S. Bitcoin miners, Riot Platforms, have been particularly active in this regard. The miner is actively trying to buy Bit farms, having already acquired nearly 20% of the company’s stock and nominated three independent directors to the board.

In a move that further strengthens its position in the industry, Riot recently completed the $92.5 million acquisition of Kentucky-based Block Mining.

This transaction, finalized on July 23, involved $18.5 million cash payment and the issuance of $74 million in Riot common stock.

A potential earn-out of up to $32.5 million is available until 2025, contingent on Block Mining securing further power purchase agreements.